Interview of the week

Cristian BALANICA, General Manager, PIRAEUS Insurance Broker

The companies that will be able to identify some yet unexplored market niches, such as the online segment, have and will keep having great perspectives. If we refer to segments less explored in the past, we can include in our discussions the European funds that have started to be present.

XPRIMM:
I propose we begin the discussion with an overview of the insurance
mediation market at this time. What do you think are the main challenges
that brokers have to face this year?Cristian BALANICA:
In my opinion, there are perhaps too many challenges in a very short
period of time. If we make a retrospective of the last two months, we
will see a lot of legislative changes that marked the profile industry
and that are trying to regulate the mediation market. At the same time,
quite a few changing strategy moves in the case of reknowned insurance
companies took place. I do not know if all these actions put together
forsee something good or not. In the context of all these events in the
economy, it is very important that we have a certain stability. Here
I don't necessarily mean the way the market works, but how it is
regulated. There are different rules that have appeared and that are
somehow trying to make some order in this industry, but I believe that
they hinder the current activity of insurance and brokerage companies. Overall, we can not be far from the trend of the economy, which currently is not an ascending one.

XPRIMM: So, we cannot say that the brokerage market is out of the crisis...C.B.: Certainly
not! Maybe next year we will have some better signs, but I doubt that. I
see problems still exist in some European capitals and, at the same
time, many analysts say the economy will suffer again, starting 2013. All
these things do not have a very good echo for us either - any strategy
is made for at least 2-3 years. Basically, any event that hinders a
particular sector of activity makes us rethink our approach.

XPRIMM:
In the first 3 months of the year, the brokerage industry has suffered a
decline, but there are many brokers who have managed to develop their
portfolio. How do you explain the situation?C.B.: The
companies that will be able to identify some yet unexplored market
niches, such as the online segment, have and will keep having great
perspectives. If we refer to segments less explored in the past, we can
include in our discussions the European funds that have started to be
present. There will always be managers who know how to find the best way
and managers who hinder a company's business by running away from
responsibility or by fear to make decisions that involve certain
commitments of the companies they represent. This is how it has always
been and this is how it will continue to be.

XPRIMM: You mentioned earlier the greater focus on the online area. Do you think this is the future in insurance?C.B.:
I do not know if in the next 2-3 years, but sometime in between 3-5
years, this alternative channel, which is currently seen as very
futuristic, will have the chance to say its word. Romanians may not be
prepared now to purchase online insurance products, but that does not
mean that generations to come will not turn to internet in order to buy
insurance. Already many insurance companies have started to implement IT
programs that allow them to develop on the online area.

XPRIMM: You said that Romanians are reluctant to online insurance. What is the problem? Why this reluctance? C.B.:
Although the degree of penetration of internet in Romania has increased
spectacularly, in general, the segment that uses this mean of
communication is the young one (16-25 years). But these people have
other priorities in life. However, lately, even the middle class
population, due to daily activity, began to turn to this convenient and
easy way to buy insurance, with immediate benefits for the customer.

XPRIMM: Referring
to household insurance, PIRAEUS Broker is now a major distributor of
such policies. How does the system work at this point and what is your
income from this activity? How profitable is it?C.B.:
When referring to mandatory household insurance policy, at the end of
last year we have had, indeed, quite an aggressive campaign. The results
were spectacular, my expectations were exceeded, for we have
underwritten a total of over 12,000 policies. Every year, especially
during this time, we are witnessing special weather phenomena, and
people should understand that at some point they have to take care of
the goods they have collected during their lifetime. This protection can
be provided only by the voluntary policy, which has more covered risks.

XPRIMM: Do you think promoting mandatory household insurance has contributed to educating the general public in this direction?C.B.:
Of course. In fact, I especially appreciate that APPA - Association for
Promoting Insurance and XPRIMM Publications in general have been the
engine that set in motion this concept of information through national
campaigns. It was necessary that the population be informed, and the
campaigns you have organized in partnership with the supervisory
authority of the insurance industry and with various state institutions
had a fantastic contribution in making this concept understood. Only
through such initiatives can we convey the message that insurance plays
an important role in society and economy.

XPRIMM: Regarding the plans of PIRAEUS Broker, what results do you expect to end the year with?C.B.:
According to the budgeting drawn in 2010, this year we should have an
increase of 25%. So far, after the first half of the year, we seem to
fit within these parameters. However, I intend to exceed this
growth, through the contribution of two large projects we will launch
soon. In general, the greatest budget contribution is represented by
bancassurance activity, which, although it started quite late, has
benefitted from the fact that all my colleagues have understood very
quickly that there is a way to ensure loyalty of existing customers from
leasing or credits, and that they can bring them closer to our
financial group by providing customized insurance solutions for each
single client.